SYLVIA LICHAUCO DE LEON, PETITIONER, VS. THE HON. COURT OF APPEALS, MACARIA DE LEON AND JOSE VICENTE DE LEON, RESPONDENTS.

Sylvia Lichauco de Leon versus the Court of Appeals and Macaria de Leon

The Case

This is a petition for review on certiorari brought by Sylvia Lichauco de Leon against the Court of Appeals and her mother-in-law, Macaria de Leon, and her husband, Jose Vicente de Leon. The action began as a joint petition of the spouses for judicial approval of the dissolution of their conjugal partnership, but it was converted into a contest over the validity of a Letter-Agreement by which Sylvia was to receive substantial properties in exchange for a peaceful and amicable termination of relations with her husband. The case matters because it fixes the rule that a contract whose consideration is the termination of the marital relationship is void, and because it reminds us that marriage is not a mere contract but an inviolable social institution.

Procedural History

Sylvia and Jose Vicente filed before the then Court of First Instance of Rizal a joint petition for judicial approval of the dissolution of their conjugal partnership. After ex parte hearings, the trial court issued an order approving the petition and declaring the conjugal partnership dissolved. Sylvia then moved for execution of that order. Jose Vicente moved for reconsideration. While that motion was pending, Macaria filed a motion for leave to intervene, claiming ownership of the properties involved, and the motion was granted. Macaria then filed her complaint in intervention, assailing the validity of the Letter-Agreement. Before any hearing could be had, judicial reorganization took place and the case was transferred to the Regional Trial Court of Pasig. That court rendered judgment in favor of the intervenor, declaring the Letter-Agreement null and void, ordering Sylvia to restore the amount paid, and affirming the dissolution of the conjugal partnership subject to the exclusion of the properties owned by Macaria. Sylvia appealed to the Court of Appeals, which affirmed the decision in its entirety. Her motion for reconsideration was denied. Hence, the present petition for review on certiorari before the Supreme Court.

Facts

On October 18, 1969, Jose Vicente de Leon and Sylvia Lichauco de Leon were married before the Municipal Mayor of Binangonan, Rizal. A daughter, Susana, was born of the union in August 1971. Sometime in October 1972, the spouses separated de facto because of irreconcilable marital differences, and Sylvia left the conjugal home. In March 1973, Sylvia went to the United States and obtained American citizenship. In November 1973, she filed a petition for dissolution of marriage before the Superior Court of California, County of San Francisco, including claims for support and distribution of properties. Because Jose Vicente was a Philippine resident without assets in the United States, Sylvia held the divorce proceedings in abeyance and concentrated on obtaining a property settlement in the Philippines.

On March 16, 1977, Sylvia entered into a Letter-Agreement with her mother-in-law, Macaria de Leon. The agreement recited that, in consideration for a peaceful and amicable termination of relations between Sylvia and her lawfully wedded husband, Macaria bound herself jointly and severally to deliver to Sylvia several properties, including condominium units, rights to Ayala lots, a house in California, and sums of money, and to give monthly support for Susana. On the same date, Macaria paid Sylvia 100,000 pesos and 35,000 dollars. On March 30, 1977, Sylvia and Jose Vicente filed the joint petition for dissolution of their conjugal partnership, embodying an agreement to partition the same properties.

Macaria later intervened, claiming that the properties belonged to her and that the Letter-Agreement was void because its consideration was the termination of the marital relationship. The trial court found that the consideration was indeed the termination of the marriage, held the agreement contrary to law, morals, and public policy, and declared it void. It also found that the properties belonged to Macaria and could not be adjudicated under Article 191 of the Civil Code, which contemplates only properties belonging to the spouses.

Issues

• Whether or not the Letter-Agreement is valid, considering that its cause or consideration was the termination of the marital relationship between Sylvia and Jose Vicente.
• Whether or not the properties subject of the Letter-Agreement may be adjudicated to Sylvia under Article 191 of the Civil Code, they being owned by a third party, Macaria.
• Whether or not the agreement is void even granting that its consideration was merely the termination of property relations.

Applicable Provisions

Article 1306 of the Civil Code provides:

Article 1306. The contracting parties may establish such stipulations, clauses, terms, and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy.

This fixes the limit of freedom of contract, which the Letter-Agreement exceeded.

Article 1409 of the Civil Code provides:

Article 1409. The following contracts are inexistent and void from the beginning: (1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; xxx (7) Those expressly prohibited or declared void by law. These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.

This is the provision that makes the Letter-Agreement void and incapable of ratification.

Article 52 of the Civil Code provides:

Article 52. Marriage is not a mere contract but an inviolable social institution. Its nature, consequences and incidents are governed by law and not subject to stipulations.

This is the foundation of the ruling that the marital relationship cannot be made the subject of a bargain.

Article 221 of the Civil Code provides:

Article 221. The following shall be void and of no effect: (1) Any contract for personal separation between husband and wife; (2) Every extra-judicial agreement, during marriage, for the dissolution of the conjugal partnership of gains or of the absolute community of property between husband and wife.

This is the alternative ground that voids the agreement even if its consideration were only the termination of property relations.

Article 1374 of the Civil Code provides:

Article 1374. The various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly.

This governs the interpretation of the ambiguous word relations in the Letter-Agreement.

Article 1377 of the Civil Code provides:

Article 1377. The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity.

This is applied against Sylvia, who prepared the Letter-Agreement.

Ruling

On the first issue, the Court held that the Letter-Agreement is void. The word relations in the agreement is ambiguous, and reading the stipulations together, the parties clearly contemplated not only the termination of property relations but of the marital relationship in its entirety. The agreement itself states that it is the stated objective of this agreement that said divorce proceedings will continue. The Court sustained the trial court's finding that Macaria's consideration was the termination of the marriage, and held that such an undertaking is contrary to law, morals, and public policy. Marriage is not a mere contract but a sacred social institution.

On the second issue, the Court held that Article 191 of the Civil Code contemplates properties belonging to the spouses and not those belonging to a third party. Macaria proved that the questioned properties are owned by her, and neither Sylvia nor Jose Vicente adduced contrary evidence.

On the third issue, the Court held that even granting that the consideration was the termination of property relations, the agreement is still void because it contravenes Article 221 of the Civil Code. The Court also applied the rule that ambiguity in a contract is construed against the party who caused it, and Sylvia prepared the Letter-Agreement.

Doctrine

A contract whose cause or consideration is the termination of the marital relationship is void from the beginning under Article 1409 of the Civil Code, because it is contrary to law, morals, good customs, public order, and public policy. Marriage is not a mere contract but an inviolable social institution whose nature, consequences, and incidents are governed by law and not subject to stipulations. Even if the consideration were only the termination of property relations, the agreement would still be void under Article 221 of the Civil Code, which voids any contract for personal separation between husband and wife and every extra-judicial agreement during marriage for the dissolution of the conjugal partnership. Such contracts cannot be ratified, and the defense of illegality cannot be waived. Finally, Article 191 of the Civil Code governs only properties belonging to the spouses, not those owned by third parties.

Disposition

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, holding the Letter-Agreement null and void and ordering Sylvia to restore the amount paid to Macaria.

Remember This

Memorize this line: a contract to end a marriage is void, because marriage is not a mere contract but an inviolable social institution. Examiners use this case to test the limits of freedom of contract under Article 1306 and the void contracts under Article 1409, and to test whether a candidate knows that Article 221 voids even an extra-judicial agreement for the dissolution of the conjugal partnership.